The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

Continued from page 4

Moreover, corporate welfare politicizes the economy. Washington’s economic policy never has been genuine laissez faire. Indeed, in the new republic Alexander Hamilton was not alone in promoting corporate welfare before there were modern corporations. But the problem has exploded as government has expanded.

Observes DeHaven: “The more that the government intervenes in the economy, the more lobbying activity is generated. The more subsidies that it hands out to businesses, the more pressure lawmakers face to hand out new and larger subsidies. As the ranks of lobbyists grow, more economic decisions are made on the basis of politics.” And the more we all pay.

Ironically, while the Left tends to rail against special interests and their role in election campaigns, its support for ever larger government inevitably enhances the role of special interests and their role in election campaigns. If government is actively enriching and destroying companies and entire industries, they have a right to influence government. The more booty that is available for political winners, the more business will spend and the harder it will fight to achieve victory.

But the greater outrage is support for corporate welfare from the Right. Political conservatives wax poetic about the virtues of the free market, but conservative office-holders often are pro-business rather than pro-market. No Republican president is pure: DeHaven points to HUD subsidies in the Reagan administration, which were provided by Secretary Samuel Pierce “to friends and private business associates.”

Unfortunately, corporate welfare has proved to be resilient even in the face of pressure to cut a trillion dollar plus deficit. As Public Choice economics observes, concentrated interests organize to defeat the diffuse public interest. So it is with business subsidies. Those benefiting from federal largesse work very hard to keep their ill-gotten gains.

But America can no longer afford politics as usual. Washington’s finances are in crisis. Only a ruthless assault on unnecessary spending will stop the U.S. from eventually becoming Greece or worse. A good place to start cutting federal outlays is money for dependent corporations.